Disaster-hit retirement village residents query $5 million insurance limit

Disaster-hit retirement village residents query $5 million insurance limit | Insurance Business Australia

Catastrophe & Flood

Disaster-hit retirement village residents query $5 million insurance limit

High-end retirement community caught off guard by Maribyrnong River flood

Catastrophe & Flood

By
Miko Pagaduan

Rivervue Retirement Village, a high-end retirement community located along the Maribyrnong River, has seen approximately 70 residents displaced after sudden river flooding damaged 45 villas beyond inhabitation and affected two others. Now, residents have called for greater insurance transparency and accountability after it emerged their $5 million flood insurance limit would not cover key works and following uncertainty around alternative accommodation costs.

The disaster, which occurred in October last year, revealed the village’s inadequate flood insurance coverage, raising concerns among residents, ABC reported.

Policy documents obtained by ABC indicated that Rivervue had a flood insurance limit of $5 million, significantly below the estimated $86 million worth of assets within the village. Rivervue, owned by property firm Tigcorp, has acknowledged that the sum will not stretch to cover all the “extensive reinstatement works” required and has pledged to cover the shortfall, ABC reported.

Joanne Heaver, a resident and former treasurer of the residents’ committee, expressed her dismay at discovering the limit, stating, “We thought we would be adequately covered, but the $5 million limit is insufficient given the scale of the damages.”

Under the arrangement between Rivervue and its residents, the company is responsible for building insurance, while residents are required to cover their own contents.

Questions regarding the insurance policy were raised by residents in the years leading up to the flood, but they claimed to have been denied access to detailed information.

Following the disaster, Rivervue initially covered the costs of temporary accommodation for displaced residents.

However, the company later notified them that it was uncertain whether insurance would continue to cover those expenses. This left many residents, such as Stan Korkliniewski, scrambling to find their own accommodations and dipping into their savings to cover unexpected rental fees.

Inquiries into the flood disaster have revealed that some villas were built on land that was previously designated a one-in-100-year flood risk area.

While zoning changes were implemented in 2016, which Rivervue has claimed pushed the flood risk boundary away from the dwellings, an analysis conducted by Karl Mellon of Climate Valuation suggests that the location is still considered a flood zone, ABC reported.

The situation has sparked discussions about the need for transparency and disclosure measures in the insurance industry.

The residents of Rivervue Retirement Village have urged the state government to mandate the disclosure of insurance information as part of the ongoing review of the Retirement Villages Act.

The Insurance Council of Australia emphasized the importance of risk reduction measures, including better land use planning and resilient building, in light of increasingly frequent extreme weather events, ABC reported.

Rivervue said it expects all residents to be able to return to their homes by the end of next month.

However, concerns remain about the long-term financial implications for both residents and the future insurability of the property.

Heaver expressed her worry about the negative impact on their investments, stating, “This has not only affected our wealth but also the financial security of our children and grandchildren.”